Pure profit made by hand

The rapid expansion of cosmetics chain Lush shows that where there's no muck there's brass. Dominic Prince reports

Lush, the cult perfume chain, does not yet have a presence in the US. But it has at least one American fan. On a recent trip to London, one of the shops in Covent Garden was besieged by secret service men who wanted the shop to be closed to the public while Hillary Clinton did her shopping.

It was not always like this. In 1993 Mark Constantine, then a 40-year- old entrepreneur, contributed to the column called "My biggest mistake" in this paper.

At the time he was the managing director and owner of Cosmetics to Go, a pounds 7m company. He said his biggest mistake was not assessing correctly the demand for his products. He was either over-stocked or under-stocked.

Cosmetics to Go was a mail-order cosmetics company that had been borne out of the success of a previous Constantine business - he was the largest supplier to the Body Shop in the UK, having sold his first henna shampoo to Anita Roddick when he was just 17.

But a year after writing in The Independent on Sunday, Cosmetics to Go had well and truly gone - bust - and Constantine had gone from being a rich man to a poor one. He lost everything he owned and urgently needed, he says, "to earn some money simply to exist".

The self-styled "cosmetics entrepreneur" hit on another idea almost immediately. Three months after going bust, he was back in business. Lush is a manufacturer and retailer of fresh hand-made soaps, shampoos and cosmetics. Lush has been a retailing sensation, much in the mould of the early Body Shop.

Consider this. The first retail outlet was started in Poole, Dorset, in April 1994 and it was profitable from the first day of operation. By the same month in 1998, there were 25 shops. A little over a year later, there are 60 shops worldwide and by the year 2000 Constantine says there will be at least 100. The company has no borrowings, a 95 per cent Dun & Bradstreet credit rating (pretty much the best credit rating you can get) and is, says Constantine, "very profitable".

The expansion programme is financed from existing and on-going revenues. But there is also an until-now secret weapon. Two very rich backers. The company was originally financed and is still co-owned by two London property millionaires, John Chalk and Peter Blacker.

There you have it, another similarity with Body Shop. When Anita Roddick started her first shop on the south coast, a single investor - Ian Mcglinn, who is still the largest individual shareholder in Body Shop - backed her.

With 25 shops in operation, the 1997-98 turnover was - according to Constantine - pounds 22m, but within that figure there was at least one shop that had a turnover of more than pounds 1m. The shops are generally located in prime sites: the King's Road in west London and two branches in Covent Garden, central London, to name just three. And all of the shops in the UK are wholly owned by Lush - none is franchised. The ones outside the UK are run not by franchisees but in partnership.

"There is", says Constantine, "no standard deal. People come to us and if we like them we'll go into business with them, but most of the people who approach us are turned down."

The things that strike you on entry to a Lush shop are the overpowering smell of perfume and the sense of wackiness. Soap is sold with the minimum of fuss and packaging and all products have not only the name of the individual who made it in the factory in Poole but also the date it was made. The stuff is produced in huge slabs and then cut up and sold in batches of 100 grams.

The cost of making the soap is secret. But, with a kilo of the Lush variety costing an average of pounds 13, the margins are probably huge. Then there are shampoos, moisturisers and hand creams - in fact whatever Constantine can dream up on a day-to-day basis.

The key to the success of the company is distribution. Because the goods are all hand-made and use ingredients such as fresh fruit, chocolate and maple syrup, with as little preservative as possible, they have a limited shelf life. In Constantine's ideal world, soap would be hand-poured into a mould and hand- cut at 4am in the morning, shipped out to one of Lush's outlets and sold by noon.

As with all good ideas, there are imitators and this is one of Constantine's biggest headaches.

"We have registered the brand name 'Lush' in every country that we operate in, but we do have real problems with trademark infringements with each of the individual products. We have a product called 'Dream Cream' and we also have an action against the high-street chain Superdrug which has just started a line called 'Dream Cream'."

The company spends a lot of money each year protecting its individual and corporate trademarks. On one occasion, a potential foreign partner went to meet Constantine and the very next week tried to register the trademark in his own name - a rough business, cosmetics. There are shops in Australia, Canada, Brazil, Italy, Japan, Singapore, Sweden and Croatia. In each of the countries where the company has a presence, there is also a manufacturing facility so the product is manufactured at source, not shipped out from the UK.

I became interested in Lush when I visited the King's Road branch on a wet Tuesday afternoon, not the best time for retail sales you might think and generally you're probably right, but the place was heaving with customers. Not only were they young and by their looks affluent, they were also buying shopping bags of the product.

Now the backers, Mr Chalk and Mr Blacker, are talking of a stock market flotation. The problem for Constantine is "as it was with Cosmetics to Go - assessing the demand for the product".

His ideal, he says, is "one thousand shops worldwide".

Voices
On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
scotland decidesIs a huge gamble on oil keeping the First Minister up at night?
Arts and Entertainment
Rosalind Buckland, the inspiration for Cider with Rosie died this week
booksBut what is it like to be the person who inspires a classic work of art?
Life and Style
techApple has just launched its latest mobile operating software – so what should you do first?
News
A male driver reverses his Vauxhall Astra from a tow truck
newsThe 'extremely dangerous' attempt to avoid being impounded has been heavily criticised
PROMOTED VIDEO
Arts and Entertainment
Lionel Messi in action for Barcelona
filmSo what makes the little man tick?
Arts and Entertainment
tvReview: An undercooked end (spoiler alert)
News
i100
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
Sport
Cesc Fabregas celebrates his first Chelsea goal
footballChelsea vs Schalke match report
Arts and Entertainment
Toby Jones (left) and Mackenzie Crook in BBC4’s new comedy The Detectorists
tvMackenzie Crook's 'Detectorists' makes the hobby look 'dysfunctional', they say
Life and Style
fashion

Olympic diver has made his modelling debut for Adidas

News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Recruitment Consultant - Soho - IT, Pharma, Public Sector

£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week